Her popularity then rose again as she took roles in less commercially successful but highly acclaimed films like Now and Then[?], Beautiful Girls and the children's movie Harriet the Spy. In 1996 she was given her own daytime talk show, called, appropriately enough, The Rosie O'Donnell Show[?]. The show proved extremely successful as O'Donnell was dubbed "The Queen of Nice". Having all manner of entertainment performers on her show, she also brought on various charitable projects, earning millions of dollars for various charities.

Children's charities were a clear favourite of O'Donnell, and she began to adopt children to raise, eventually adopting four. During the late 1990s she limited her movie appearances to cameos and children's films, although she appeared in several gay-themed films. This led to tabloid speculation that O'Donnell was actually a lesbian.

In the year 2000 O'Donnell saved the near-bankrupt magazine McCall's[?] by buying it and changing the name to Rosie[?]. Rather than cover the magazine with thin models and fill it with stories about how to be more beautiful, she opted for stories about depression, breast cancer and foster care[?]. In this, she continued her tradition of standing up for what she believed in.

In the year 2002 O'Donnell decided to stop working on her talk show, favoring a return to stand-up comedy. Her show, which was to still be called The Rosie O'Donnell Show, was to be hosted by comedienne Caroline Rhea[?]. Just before quitting, O'Donnell proved rumors to be true when she came out of the closet as a lesbian. (In fact, within the gay community this was common knowledge.) She had various reasons for doing so, including the need to put a familiar and beloved face with homosexuality, but her primary reason was more important. As a lesbian adoptive mother (with a long time lover) she was infuriated that adoption agencies, particularly in Florida, were refusing adoptive rights to able and loving gay parents[?]. She hoped to educate viewers around the world on this subject.

After leaving her show and coming out, O'Donnell underwent an image change. She returned to stand-up comedy, and within her first few shows made fun of various celebrities (among them former comedienne-turned-fashion critic Joan Rivers[?].) She also received what was considered by many to be an unflattering, somewhat masculine haircut (remniscent of Cyndi Lauper's hair in the 1980s.) The tabloid press again picked up on her life, claming that she had abandoned the "queen of nice" image. O'Donnell pointed out that her stand-up routine had always been very political and abrasive, and that her haircut was a personal choice. She eventually claimed that she had cut her hair in imitation of Boy George, in hopes that he would allow her to produce his stage show in the United States. If that was the true motive, it proved successful.

O'Donnell continues to entertain and remains a popular pop culture icon, and an important celebrity representative of the gay and lesbian community.